i. Grounds, Requisites, and Period for Filing a Claim for Refund or Tax Credit Certificate

Entitlement to Refund or Tax Credit for Revenues Derived from Hedging Activities

In a claim for a refund or the issuance of a tax credit certificate under special incentive laws, hedging undertaken to protect foreign-currency revenues earned from registered operations is very much related to the taxpayer's registered activities¹. In Aegis Peoplesupport, Inc. v. CIR, G.R. No. 216601, 1 February 2021, the Supreme Court recognized that hedging serves to insure against losses resulting from unfavorable price fluctuations¹.

When a taxpayer enters into hedging contracts specifically to protect gross foreign currency revenues earned from registered operations against severe local currency devaluation, such contracts are deemed very much related to the registered activities¹. As a consequence, these transactions remain eligible for preferential tax treatment under Republic Act No. 7916 and Executive Order No. 226, entitling the taxpayer to a refund or the issuance of a tax credit certificate for amounts paid inconsistent with that preferential status¹.